Step 1 – Narrative Review Report Preparation The Expert Consultant shall prepare a draft written Narrative Review Report of the taxpayer's captive/microcaptive insurance program(s), actuarial reports, feasibility studies and insurance policy contracts, including analysis of the data, assumptions, and other information that may or may not have been included for each approved Exhibit A-1: CSR. The Expert Consultant shall identify any problems associated with the underlying information and assumptions used to reach the conclusion. The Expert Consultant shall review the insurance policies to make sure they are valid and binding and cover an actual insurable risk. The Expert Consultant shall evaluate whether the premiums are reasonable and determined objectively. The Narrative Review Report must include the Expert Consultant’s observations and opinions on the deductibility of the premiums paid in the captive/microcaptive insurance program under statutory and case law. Step 2 – Deliverables and Timeframes The draft Narrative Review Report completed by the Contractor must follow the Actuarial Standard of Practice Number 41 (Actuarial Communications) and include the following information, at a minimum: Scope of the assignment: Evaluate whether the insurance policies were appropriately priced using reasonable actuarial techniques. Evaluate whether the arrangements and transactions make economic sense, absent the tax savings achieved. Materials reviewed and analyzed: Insurance premiums for each type of coverage (commercial property/casualty/professional). Captive insurance company's actuarial report. Captive insurance business plan. Income Statements and Balance Sheets for the captive insurance company. Correspondence from those involved in the captive insurance formation and management. All other materials the Contractor obtains and relies on in conducting the analysis. Conclusion and overall findings in summary format with Expert Consultant’s opinion of the taxpayer's captive/microcaptive insurance program(s). The Contractor shall provide the draft Narrative Review Report via email to the FTB Contract Manager within thirty (30) State business days of the date of FTB’s approved Exhibit A-1: CSR approval email. FTB personnel shall review the draft Narrative Review Report and respond to the Contractor via email within ten (10) State business days of the date the Contractor emailed the Narrative Review Report by either: Providing comments and questions regarding the draft Narrative Review Report, or 2. Notifying the Contractor via email that there are no comments or questions. The Contractor shall provide the FTB Contract Manager a final Narrative Review Report via email within ten (10) State business days of the date of FTB’s email response.
